This post was updated on November 18th, 2022 – A collaborative post
Can you really ‘think yourself rich’? Growing your wealth might seem impossible but I’m here to tell you that it is not only possible but that it is also actually the best chance you have of making a lot of money.
Many of us dream of living in a large luxurious house in a sunny country, we imagine wearing smart suits that exude power and confidence and we wish that we didn’t have to make so many hard choices because our funds can’t support the lifestyles we want to lead.
If that sounds familiar, then you need to make a change. And as with ALL things, that change starts with you and your mindset. If you want to grow wealthy, then what are you doing about it? And is there any chance that you may, in fact, be going about it the wrong way?
Wealth and Your Career
If you ask the average person in the street what they would hypothetically need to do in order to become richer, 99% of them will tell you the same thing: get a better job. Okay, fair enough. They are not wrong per se. Indeed, getting a better job won’t hurt their income, and that, in turn, will likely mean they get richer at least a little.
But in fact, this is not the whole story. And what’s more, is that this isn’t even the main part of the story. Wealth and salary are not inextricably linked.
They are related sure, but only to a small degree. If you wanted to see an equation telling you how to grow wealthy, then it would really look like this:
Wealth = Income – Outgoings
So, let’s say that your income is determined solely by the amount of money you are making at work. Even in that scenario, you still have another, equally as important factor. That is your outgoings. If you earn a cool million dollars a month but you also waste a million dollars a month of lavish holidays and on nights out and clothes, then you are ultimately not going to be very well off. Rather, you’re likely to lose money over time.
But if you are earning a more normal $2500 a month but you only spend $500, then suddenly you are saving $2000 per month. In 12 months, you’ll have $24,000 saved away.
That’s a decent down payment on a house! So, you now have two options. Two ways to get richer. One is that you seek to get a better job and increase your income and the other is that you save more money and spend less.
There are a lot of opportunities to increase your income and make extra cash such as blogging or becoming a virtual assistant. Wherever you are you have some opportunity to make cash in blogging.
With the help of the internet, you can do some paid surveys or freelance writing for a fee. Sports betting has also gained popularity lately as a way to make some extra cash. It involves cash placing a stake based on predicting how the game will perform – some are so successful at this that they have been able to make it their full-time job. If you’re up for taking the risk and giving sports betting a try, you can access some legal sports betting tennessee based sites and place your bets online.
ALSO READ: How to land your Dream Job in Japan
How to Spend Less
There are areas in Makati, Manila (the capital of my home country) that are referred to as ‘millionaires village’ because these villages have mostly expatriates, diplomats, and affluent businessmen.
So, these people own expensive cars, condo units, and belong to a club that is situated in one of the wealthiest parts of the country. Suffice to say that they were not struggling for cash. And of course, many people would want to be in this club.
When I was in high school, I lived with a host family to sustain my studies. There is a prestigious family in the town and we live near their mansion. I would usually look up at night and dream that someday I will be as rich as them and will have the same big house and expensive cars. My mind would always wonder, how did they get rich?
Now that I am older, I think I have an answer to the question.
The wealthiest people recognize that every little bit adds up and makes a very big difference in the long run. Your aim now is not to fritter. That $3 coffee you have every morning on the way to work is actually $15 over the course of a week. $60 over a course of a month and $720 over the course of the year.
That is a tiny amount and that’s before we have even considered all those other things you likely pay for that you don’t really need. Maybe your Spotify account, Netflix, 100+ TV Channels, gas for the car for all those trips you don’t really need to make. It adds up. Worse are all those larger purchases we make on an impulse.
ALSO READ: 10 Things to stop buying to save more money
These are things like clothes that we think will make us look smart, games consoles, PCs, overly advanced phones. How much did your phone cost you? If you’re on a contract, then chances are you’ll be paying $700 or more for it.
Now ask yourself how much more that phone really does than something for $300. Do you really need the fastest processor around? Considering that even an old phone can play everything in the app store?
Do you really need a 30-megapixel camera? Or a 4K screen? Can you even see the difference between 4K and 1080p? The real problem here is marketing, the internet, and other people. We have unfortunately been conditioned to associate these items with success and to find them highly desirable. We want to get the latest phone, car, computer, etc. because it looks so sexy in those adverts. But the reality is that these things don’t really bring us happiness.
Likewise, we are told that we need to buy a large house, go on lavish holidays. Is this really for us? Or is it so that we can look successful to others? I’m not telling you to cut back on all the things that make you happy here. There is no point in growing wealthy if you aren’t going to enjoy it and have a better quality of life for yourself and your family.
All I’m telling you is to make sure you are certain of what it is that does make you happy. And that often means deciding what you don’t need and what you should be prioritizing. Have you always dreamed of a beautiful big house? Then why not stop going on those big holidays for a while? Why not stop buying widescreen TVs? And how about considering getting that big beautiful house in a less expensive area?
Conversely, if all you want is to travel the world, then you can change your accommodation to something less glamorous. How about moving to a quiet neighborhood and living in a spare bedroom for a while? Your outgoings will be low, so you can enjoy going on more holidays and still save up that wealth. Know what you want to achieve with that money. Know what wealth means to you and then you can focus on being more efficient with your money.
This will also help you to set up a budget and/or a plan. If you know how much you have coming in and how much you’d like to be making per month, saving per month, and spending on things that make you feel wealthy per month, then you can create a budget that will help you to reach that point within a specific timeframe. This then is where you can look at those small things you can cut out to save money.
If you have a spreadsheet that contains all your income and all your outgoings per month, then you can look at what kind of impact cutting coffee from your routine would actually make. You’ll be left with a total profit at the end of each month and you can decide how much of that you want to put into savings and how much you intend to spend on other things.
You can even set up standing orders in your accounts so that money saved automatically gets transferred to a savings account. With such a spreadsheet, you can then multiply the savings you are making by any given number of months and see projections of what your finances are likely to be at certain points in the future. Need more money for an upcoming expense?
Then look at something else you can do to cut your expenditure. This is called ‘financial modeling’ and it’s a powerful tool for building your wealth rather than just letting it ‘happen’ without your direction or input.
A Couple More Ways to Save Money
And what if you have run out of things you can cut in order to save money? What if you are living on as little as possible? A few other options include changing your providers for bills, selling off old items, or even moving money between accounts in order to receive bonuses. A friend of mine does this religiously and will even take out credit cards with 0%APR, just so that he can put all of that money into an ISA and then make a profit on it.
If he gets a cash incentive to sign up for anything then he will sign up! And he never buys a new piece of tech or even clothing without taking one of the older items to sell and thereby offset the cost. Something else to note is that if you have a dream of a wealthy future, then you might need to ‘be okay with living a little more simply for a while in order to get there.
You need to put the work in now, to reap the rewards in the future. And this is hard because it often once again means forgetting the conventional signals of wealth and success. Once again, you have to do this for yourself and not be worried about what others might think. So for example, if you want to someday have a beautiful home, one of the very best things you can do is to live with your parents if they will let you.
Sure, it’s not glamorous and it’s not fun, but if they charge a small amount of rent you’ll be able to save so much per month that it will help you to get on the property ladder MUCH faster. You could then buy a smaller home in a less attractive area but flip the property to make a big profit. You need to put in the graft and have an eye on the future.
Likewise, you might need to learn to stop trying to demonstrate your wealth and stability to friends. Have you ever met up with a friend and eaten in a restaurant that you can’t really afford because you want to see them and because it is embarrassing to suggest eating somewhere cheaper? As you can imagine, this isn’t exactly conducive to getting wealthy quickly! Again, you need to be willing to tell them that you can’t afford it and to go elsewhere. How about you suggest they meet you at your house?
Setting Up Revenue Streams
Next, come the revenue streams. We’ve seen how you can actually become richer without changing your job, simply by spending less. The other strategy is to grow wealthy by having more than one income stream. Once again, your salary isn’t determining your wealth! So, what might this mean? One simple option is to take on another job, such as a weekend job.
If you are happy to work on a Saturday, then you will have potentially $150 extra to spend each week! That’s $600 per month or $7,200 per year! Save that and in a couple of years, you can be living in a nice house – or you can use it right now to feel that bit wealthier and wear those fancy clothes. This is a big sacrifice though granted. So, what would be better for most people would be to earn money online for instance.
Tim Ferriss describes creating a ‘muse’ in his book The Four Hour Workweek, which is a small online business that generates a passive income. This can be as simple as finding an affiliate product (a product that you sell for commission) and making a simple website recommending it, then sending people there with ads. This is very low maintenance but can potentially make a fair amount of money.
You could try matched betting alternatively (a form of betting that ensures you can’t lose – it uses only the free bonus amounts that you get given for signing up) or you could look for a simple online job. How about selling photography online? Working as a writer or a web designer? Or, like a friend of mine, teaching English online.
You can also make money from arts and crafts of course and sell some things you make on the side, or you can buy and sell items in bulk on eBay! Then there are the other options that work offline: these include such things as renting out rooms to students, such as mowing the neighbor’s lawn, cutting hair, teaching an instrument, etc.
All these options will help you to make an income that will be added to your current income.
Not only does this of course give you a better total, but it will also help to make you more ‘resilient’ so that if anything ever happens with your main job, you’ll of course still have some money coming in.
Another tip? The more you make, the more you’ll make. Try to look for investment opportunities, whether that means buying a second house and letting it out to someone else, or whether it means moving to an area that you know is up and coming.
A strange thing to think of here is board games. If you’ve ever played Monopoly, or any other game where you have to amass a kind of resource, then you might have found that it pays to invest wisely early on. To get the card that will pay out just a little bit every round, or that will prevent you from losing a little bit every round.
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OVER TO YOU
These seem like small changes in the short term but over the course of the game, they ultimately put you in a position of great power and help you to win decisively! It’s the same in real life. Make a few right choices that will build up over time and will grow wealthy. Know what you want. Be patient. And avoid the temptation to splurge on the short-term gratification. That is how you get into a wealthy mindset!